13th September 2011
Top Story: Plantation ' Weather risks emerging? Neutral
Sector Update
'' Malaysia's CPO production fell 4.8% mom in Aug while exports fell by 2.7% mom. As a result of the larger mom decrease in production vis-''-vis exports, closing CPO stock levels fell by 5.6% mom to 1.88m tonnes in Aug (from 1.99m tonnes in Jul). Stock/usage ratio in Aug thus fell to 9.95% (from 10.8% in Jul), which is still above the 9-year average of 9.1%. Production could remain slightly weak in Sep due to the Hari Raya festivities, when the Indonesian plantation workers go for a break. This trend could reverse, however, in Oct/Nov, being the last few months of the traditional peak season, assuming no weather risks emerge.
Sector Call
Telecom: 6% service tax deferred Neutral (down from OW)
Sector Update
Axiata: Fair value lowered to RM5.35 (from RM5.60) Market Perform
DiGi: Fair value lowered to RM31.50 (from RM34.00) Market Perform (down from OP)
Maxis: Fair value lowered to RM5.65 (from RM6.00) Market Perform
TM: Fair value maintained at RM4.68 Trading Buy
Corporate Highlights
Uzma: Poised to impress Not Rated
Visit Note
'' We believe Uzma warrants a second look as: 1) Long-term contracts underpin consistent future earnings; 2) The company has intimate knowledge of the fields and has first-hand knowledge of any upcoming projects/opportunities; and 3) MECAS purchase could lead to potential chemical enhanced oil recovery (CEOR) project wins.
Axiata: Highlights from Analyst & Investor Day 2011 Market Perform
News Update
'' On M&A, management's focus remains primarily on in-country consolidation. In the short term, management hinted M&A in the overcrowded Cambodian mobile market.
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